Credit: the right of borrowers

You want to buy real estate by borrowing? Whatever the nature of the credit you subscribe, the French legislation in force grants you rights protecting you. Know the right of the borrowers.

The protection of the borrower

The Scrivener Law

In effect since July 13, 1979, the Scrivener Act provides the borrower with protection against loan abuse. It applies to all loans financing the purchase of real estate for residential use or for professional purposes, the acquisition of building land, the carrying out of renovation or construction work of which the amount exceeds to € 21,350 or for the purchase of shares in a real estate company.

Credit offer: a 10-day cooling off

The right of borrowers to issue a loan offer:

When you receive an offer of credit issued by a lending organization, to be sent by registered mail with acknowledgment of receipt and include 3 copies, you have 10 days to think about it to review it and make your decision. As this reflection period is mandatory, you can not send a reply by mail until its end. The credit offer remains valid for one month from the date you receive it. You therefore have 20 additional days, once the cooling off period has expired, to study and compare the offer, and give your answer.

Conditions precedent for a real estate purchase

During any acquisition of a property, the buyer benefits from conditions precedent of sale. These can be applied to obtain a loan to finance the acquisition. It should be noted that in the absence of obtaining within the fixed deadlines, the purchaser can recover his deposit of guarantee because he is no longer bound by the promise of sale (or reservation contract). Conditions precedent to sale also apply if the building permit is refused. There is then nullity and non-existence of the demand for credit. In the case where the purchaser contracts several credits, those whose amount is greater than 10% of the total loan must be concluded under the condition precedent of other credits.

The pre-loan offer

Any prior credit offer must specify the elements allowing the borrower to make a decision. These are:

The hostile economic context in which we live is characterized by inflation and unemployment. Yes, getting out of debt now is a bit more complicated. The indicators of people and companies in default have been increasing . The difficult task of doing a financial planning in the future and the fact that there are no entities that offer loans at a fixed rate, forces people to take on more debts than they can afford.

This is how people have increased their payment commitments, having more expenses than income, which for various reasons they have contracted. Now, when it comes to the point that the money that has been earned is already due, then in most of the times the wrong decisions are made. This forces us to resort to the different options that may exist, but choosing the one that, instead of minimizing the debts, increases them. Getting out of debt does not happen in a day, but it is definitely possible.

Actions to consider to get out of debt

There are several methods that can be implemented to get out of debt , either by paying the lesser amount up to the higher one. Or on the contrary, starting with the payment of the one with the highest interest rate. Regardless of this, the first thing to do is define the parameters to be met. It is necessary to design the strategies to follow and initiate the steps that will allow the elimination of debts. These debts truncate the financial stability of people. To do this, firm and smart decisions must be made in the short, medium and long term.

A design in the strategies to implement allows identifying every detail to get out of debt. Among these are loans and credits acquired, as well as fixed expenses. Likewise, a list must be made with fixed income, in the short and medium term. The main reason is that they allow to define exactly the assets and liabilities of a person.

Once this information has been obtained, it is important to prioritize the debts, considering who is owed, how much, the terms in which you can pay and the interest rates to pay, being able to use as a first strategy to reduce expenses, eliminate unnecessary or increase income.

Paying the Debts

When the first debt has been paid, it must be removed from the list. This does not mean that new payment commitments can be acquired since, instead of leaving debts , they would be increasing. In these cases, what must be done is to pay the next one on the list, being able to do it in a shorter term. This would minimize the risks of a negative credit history.

We can not leave aside the entrepreneurs who understand that financing is key in every company to develop. Keep that development constant and grow over time. However, in the absence of money they are forced to incur debts. If these debts accumulate, they create a significant financial problem that can lead to bankruptcy. That is why it is also necessary to be prepared to face this type of situation and get out of debt on time.

Negative Effects in the Credit History

The main reason is to avoid negative effects on the credit history of a person or company. It is important to indicate some recommendations that must be considered to get out of debt . In this sense, debts must be controlled by creating a monthly budget. This constantly monitoring the basic expenses so as not to incur the unnecessary ones.

When you have several outstanding debts, it is recommended as a first option to prioritize the payment of debts with high interest. This helps us avoid default, especially when it corresponds to vehicle or mortgage loans. This is because of their high quotas, which can generate a problem in the short and long term. This may cause legal action to be taken against you.

In conclusion, poorly contracted debt can destabilize the personal, family and even business economy. And this is the importance of encouraging financial education for people, workers and families. A simple design for the development of a revenue recording system, planning of expenses, construction of balances and possibilities of saving, investment, indebtedness or expense, will not only help to get out of debt , but also will allow to avoid errors that entail a over-indebtedness

The most common loans

In bank loans there is a creditor and a debtor. The creditor gives the debtor a certain amount of money for a certain amount of time. The condition for the loan to be made is that when the debtor has to repay the loan. In the initial contract of the loan, it is agreed to return the money at a rate of interest.

Mortgage loans begin when the loan is made to the interested party. There must be a guarantee of by means, which is a housing in the largest of cases. It is the duty of the debtor to comply with the initial conditions of the loan. If the debt is not settled, the debtor’s house will become the property of the creditor. The loan can not be more than 80% of the value of the home; in this way it guarantees its usefulness.

Other types of loans

Student loans, student loans, are becoming increasingly popular in the United Kingdom. Banks promote their loans, boosting education and making them attractive to student families. The loan of studies tries to improve the offer of the scholarships, since in the long term and with a good volume the bank ends up gaining very significant utilities. Interest on this type of loan is relatively low compared to other types of loans.

The loans to the consumer are short-term and in smaller amount of money lent. The government can finance durable consumer products such as a television, a car or a motorcycle. All kinds of durable products in general, extra or unforeseen expenses. You can purchase services, as well as goods.

The business loan is quite opportune to start a business. The project is justified before the financial institution and the company is founded. When a company wants to expand, or start a project, it is also very profitable. When there is not enough liquidity flow and the company requires some extra expense, it is also requested. Before the current crisis and the proliferation of Small and Medium Enterprises, business loans increased their demand.

The loan and its benefits

Signing of a loan contract

There are several options for this type of loans, in turn fight the economic crisis of your country if it exists. Crowfunding is a collective financing for projects of very high magnitude. There are an infinity of projects that involve impressive capital. Sometimes a single financing is not enough for a transnational company to have enough liquidity to grow. This option, called crowdfunding, can also be used for political campaigns.

The credits now are sub-classified loans in different ways. Traditional credit, commercial credit, consumer credit and mortgage credit. On the other hand we have the consolidated credit, pledge credit, personal credit, fast credit, syndicated credit, educational credit, automotive credit, mini credit, micro credit and business credit.

For all the credits mentioned above the only thing that will vary are the parameters of all. These sub-classifications are mainly: the amount of the amount borrowed, the form and the periods in which the payments will be made. The interest rate, which depends on the need of the person who needs the loan. The more you lend me the more you charge me. All this is agreed at the time of signing the contract.

Advantages and disadvantages

The advantage of loans, for example, is that in Real Estate, most assets increase over time. It is totally profitable to request a loan for the acquisition of a home. Or even the same land, to later build a house. With the passage of time this house is increasing its value, a good business. This is an example of a profitable business.

The disadvantage of loans is the debtor’s lack of commitment towards the creditor. Today the economy is much more volatile than it was before, and people have to uncover a hole to cover another. A loan is a money that we have to pay back, and you have to be smart when it comes to applying for it. There is no consistency in spending money that you do not really have. There has to be a considerable economic balance before even thinking about applying for a loan. There are professionals dedicated exclusively to that, to lend money to people who did not know how to take care of their economy from the beginning.

The Banks are dedicated to saving our money and charging us only a little for this task. They also dedicate themselves to lend us money that later we will not be able to pay, if we are not smart.